Variable cost per unit: Direct materials ... Fixed costs per year: Direct labor..... Fixed manufacturing overhead.. Fixed selling and administrative expenses. $16 $540,000 $822,000 $370,000
Super-Variable Costing and Variable Costing Unit Product Costs and Income Statements
Ogilvy Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:
The company does not incur any variable
Required:
1. Assume the company uses super-variable costing:
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3.
2. Assume the company uses a variable costing system that assigns $9 of direct labor cost to each unit produced:
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3.
3. Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net operating incomes in Years 1, 2, and 3.
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